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Most countries in Western Europe have the social net curse blogging them down. The high tax, high social care system only works if the country is on a good grow

Most countries in Western Europe have the social net curse blogging them down. The high tax, high social care system only works if the country is on a good growth track. As more people turn old and retire, someone has to pay for those. With wage stagnation in most normal occupations and lack of growth, the way they have tried to tackle this is with increase in immigration, which in turn keeps wages low in low paying sectors. Also, unlike US which does integration really well, this is not true for Europe where high immigration is leading to even frictions because of lack of integration. On top of that, tech emerging as a big industry which forms a big part of the whole economic output of a country, has led to Europe losing out to US. Although only China through thier protectionism has been safe from that. You can see this in the commentary about UK politics, where they don't have money to fund NHS and NHS wages haven't grown which has bogged down their healthcare system. Most of the manufacturing ecosystem is completely degraded. Productivity is at a complete toss as well, as they are not even able to build high speed rail well now, which for a social net country like UK should be of paramount importance. To combat this, they have increased taxation, either through freezing slabs or moving down tax slabs. This penalises people in high wage professions and it leads to loss of competitiveness.

DanBC 3y ago
> where they don't have money to fund NHS We do have the money to fund the NHS. Successive Conservative governments have made the choice to defund the NHS, along with public health, and social care. And they did all of this on top of Brexit.
solardev 3y ago
You know, the US spends most of our government money on old people too (social security, medicare, etc.). https://en.wikipedia.org/wiki/United_States_federal_budget#/media/File:Federal_budget_2022.webp https://en.wikipedia.org/wiki/United_States_federal_budget#/... We just get less bang for the buck for it because our healthcare and housing are so terribly inefficient and expensive, and we don't have a strong culture of familial support. We can't build high speed rail either -- we can't even keep our low-speed rail running well -- and our answer to expensive healthcare is typically just "let them die, we can replace them" (immigration too, except we don't have to give our immigrants anything, just wink and pretend we hate them). At the end of the day no society has it all figured out yet, but I'd love to live in a place with social services and a less hostile democracy so that all the citizens can work together to figure out next steps, instead of being dragged kicking and screaming by the rich. It's just a more collectivist mindset, not necessarily better or more right in any way.
- actuator 3y ago
  > You know, the US spends most of our government money on old people too (social security, medicare, etc.). My whole point was how these issues are less of an issue for US, again comparing with UK US has better age demographic distribution than UK The net tax burden on an average UK person is way higher compared to US while having worse average wages. Quick googling shows per capita income tax collected in US is $15K, while in UK it is $21K GDP per capita of UK is $46K compared to US's 70K If even after having high taxes, a country is having problem funding social services, then that's a big issue as the high taxes are meant to take care of that. US doesn't have this issue as taxes being lower, people can use the money not spent on tax on funding the social care things for themselves. Also, overall US is still an attractive place for high earners so it will keep on attracting people from those segments which will boost its tax revenues and lead to decline of Europe. As while western Europe might be still a good place for people on median wages or below, USA might be much better for people on the other end
  - solardev 3y ago
    > US has better age demographic distribution than UK I can believe that. Japan's even worse off, wonder what they're gonna do... > The net tax burden on an average UK person is way higher compared to US while having worse average wages. Quick googling shows per capita income tax collected in US is $15K, while in UK it is $21K It's a bit trickier than that, because some of the same services (like healthcare) are still paid by the typical consumer in the US, it just doesn't show up in their taxes. $6k/year might actually just cover the premiums for a small family (what you pay the insurer before you use any services). Using that healthcare would be way more expensive. I think a fairer comparison would be discretionary income (disposable income minus cost of living expenses like housing, healthcare, food, education), etc. Unfortunately that data isn't easy to find, and definitions differ, but without considering all of those, it's not really apples-to-apples just to look at taxation rates. The average person is more affected by "how much money do I have left to spend after the essentials" than "am I paying the government or a private company for these essentials".
    - 3y ago
avidphantasm 3y ago
The problems of the UK and US declining industrial base is due to lack of “protectionism” as you call it. Really it’s been a de facto industrial policy of disinvestment and off shoring driven by financialization of their economies over the last ca. 45-years. Free capital flows benefit capitalists, not ordinary citizens.
blindhippo 3y ago
And yet these countries still focus on taxing income only, meanwhile a massive mountain of growing untouchable wealth is sitting there, owned by the older generation who supposedly need to be supported with the income generated by the young. Tax and wealth distribution needs a fundamental rethink going into the next few decades - I really don't have high hopes that the current approaches will work. As you say, they are predicated on high growth scenarios which western nations are no longer experiencing at a macro level.
- jjkeddo199 3y ago
  Don't kill the goose that lays golden eggs
dauertewigkeit 3y ago
People have been trying to link the two together, but I see no direct link between (good) economic growth and public social spending. It is not because of welfare that there are less startups in Europe and it is not because of welfare that the big companies in Europe prefer to be more conservative with their spending on R&D. It's cultural. It's people being more financially conservative and risk averse.
chimprich 3y ago
> To combat this, they have increased taxation, either through freezing slabs or moving down tax slabs. This penalises people in high wage professions and it leads to loss of competitiveness. I'm a relatively well paid software engineer in the UK, and I don't recognise this at all. I would be very happy to be taxed more to have a better health system. I wouldn't see this as being penalised, but something I'd vote for. I have plenty of disposable income; if I had a bit less I'd probably spend less on buying expensive tech gadgets from American companies, investing in international shares or taking foreign holidays. It would be better for the country if that cash was diverted towards the NHS. I think overall it would make the country more prosperous. A sick workforce is an inefficient workforce. Having a bit less cash would not make me less keen to start a company or change employer for more cash. In fact it would probably do the opposite.

DanBC 3y ago

> where they don't have money to fund NHS We do have the money to fund the NHS. Successive Conservative governments have made the choice to defund the NHS, along with public health, and social care. And they did all of this on top of Brexit.

solardev 3y ago

You know, the US spends most of our government money on old people too (social security, medicare, etc.). https://en.wikipedia.org/wiki/United_States_federal_budget#/media/File:Federal_budget_2022.webp https://en.wikipedia.org/wiki/United_States_federal_budget#/... We just get less bang for the buck for it because our healthcare and housing are so terribly inefficient and expensive, and we don't have a strong culture of familial support. We can't build high speed rail either -- we can't even keep our low-speed rail running well -- and our answer to expensive healthcare is typically just "let them die, we can replace them" (immigration too, except we don't have to give our immigrants anything, just wink and pretend we hate them). At the end of the day no society has it all figured out yet, but I'd love to live in a place with social services and a less hostile democracy so that all the citizens can work together to figure out next steps, instead of being dragged kicking and screaming by the rich. It's just a more collectivist mindset, not necessarily better or more right in any way.

actuator 3y ago
> You know, the US spends most of our government money on old people too (social security, medicare, etc.). My whole point was how these issues are less of an issue for US, again comparing with UK US has better age demographic distribution than UK The net tax burden on an average UK person is way higher compared to US while having worse average wages. Quick googling shows per capita income tax collected in US is $15K, while in UK it is $21K GDP per capita of UK is $46K compared to US's 70K If even after having high taxes, a country is having problem funding social services, then that's a big issue as the high taxes are meant to take care of that. US doesn't have this issue as taxes being lower, people can use the money not spent on tax on funding the social care things for themselves. Also, overall US is still an attractive place for high earners so it will keep on attracting people from those segments which will boost its tax revenues and lead to decline of Europe. As while western Europe might be still a good place for people on median wages or below, USA might be much better for people on the other end
- solardev 3y ago
  > US has better age demographic distribution than UK I can believe that. Japan's even worse off, wonder what they're gonna do... > The net tax burden on an average UK person is way higher compared to US while having worse average wages. Quick googling shows per capita income tax collected in US is $15K, while in UK it is $21K It's a bit trickier than that, because some of the same services (like healthcare) are still paid by the typical consumer in the US, it just doesn't show up in their taxes. $6k/year might actually just cover the premiums for a small family (what you pay the insurer before you use any services). Using that healthcare would be way more expensive. I think a fairer comparison would be discretionary income (disposable income minus cost of living expenses like housing, healthcare, food, education), etc. Unfortunately that data isn't easy to find, and definitions differ, but without considering all of those, it's not really apples-to-apples just to look at taxation rates. The average person is more affected by "how much money do I have left to spend after the essentials" than "am I paying the government or a private company for these essentials".
  - 3y ago

avidphantasm 3y ago

The problems of the UK and US declining industrial base is due to lack of “protectionism” as you call it. Really it’s been a de facto industrial policy of disinvestment and off shoring driven by financialization of their economies over the last ca. 45-years. Free capital flows benefit capitalists, not ordinary citizens.

blindhippo 3y ago

And yet these countries still focus on taxing income only, meanwhile a massive mountain of growing untouchable wealth is sitting there, owned by the older generation who supposedly need to be supported with the income generated by the young. Tax and wealth distribution needs a fundamental rethink going into the next few decades - I really don't have high hopes that the current approaches will work. As you say, they are predicated on high growth scenarios which western nations are no longer experiencing at a macro level.

jjkeddo199 3y ago
Don't kill the goose that lays golden eggs

dauertewigkeit 3y ago

People have been trying to link the two together, but I see no direct link between (good) economic growth and public social spending. It is not because of welfare that there are less startups in Europe and it is not because of welfare that the big companies in Europe prefer to be more conservative with their spending on R&D. It's cultural. It's people being more financially conservative and risk averse.

chimprich 3y ago

> To combat this, they have increased taxation, either through freezing slabs or moving down tax slabs. This penalises people in high wage professions and it leads to loss of competitiveness. I'm a relatively well paid software engineer in the UK, and I don't recognise this at all. I would be very happy to be taxed more to have a better health system. I wouldn't see this as being penalised, but something I'd vote for. I have plenty of disposable income; if I had a bit less I'd probably spend less on buying expensive tech gadgets from American companies, investing in international shares or taking foreign holidays. It would be better for the country if that cash was diverted towards the NHS. I think overall it would make the country more prosperous. A sick workforce is an inefficient workforce. Having a bit less cash would not make me less keen to start a company or change employer for more cash. In fact it would probably do the opposite.